Middling Start for Financials Beckons

By David Gaffen

Financial shares look to be a mixed bag in the early going while the broader market heads for another early-session decline. Shares of UBS AG were down nearly 5% in premarket action and Bank of America Inc. was set to lead lower now that it has closed the acquisition of Countrywide Financial, but CIT Group shares were looking better after an asset sale.

UBS was down 5% after the Justice Department said it wants the company to turn over names of wealthy U.S. clients who allegedly used the bank to avoid paying taxes. The company separately said it had adopted new corporate-governance rules and board changes to head off criticism from shareholders.

Bank of America, meanwhile, fell 1.6% after the Countrywide acquisition closed, and the company’s credit-default swaps, which measure the cost of insuring against a default on the debt, rose. The cost of insuring $10 million in bonds against default for five years rose to $125,000 from $110,000 Monday, according to Phoenix Partners Group.

Shares of CIT Group headed higher in premarket action, gaining 14% after the lender said it reached agreements to sell its home-lending and manufactured-housing businesses for $1.8 billion in separate deals. The company’s CDS tightened, dropping the cost of insurance to $715,000 from $770,000.

Comments (4 of 4)

12:01 may be right, who do you think under wrote all the bundled packages of undiscovered non-transpierces bundles of sub-slime loans that Countrywide and their fellow (legions) partners in the International IB and Global Mega Cap Banking syndicated crime wave that sold off this void of volume of debt to un-inspecting high yielding greed mongers...?

12:01 pm July 1, 2008

Sounds like a plan to me... you think! wrote :

Automat Anon at 10:27,
You gota' understand before Country-snide was taken over by BofAAH's... they had no ax-cess to the $Muck Money loan window to spin their web of deceit and lies in the re-pro markets! Now that BofAAH's in charge the same ones being foreclosed on are the same tax payers paying through the nose for the Fed's Window of Greed to the tune of 2.0% + interest on top of the defaulted 6.5-11% original loan rate loss of a national depreciated housing market in the 25-40% avg. range... "Deflationary Depression" in The USA... you go do the numbers and this will surely look different through those we the people blinders trudging straight ahead into the spec's (volume) that the abyss can hold; BofAAH's may jut ... raise the "Titanic" on the backs of the dumb sheep being herded to the slaughter house of greed! I think I'll shift into low gear here 4-5 years out time frame but ever so slowly raise the Titanic... hum you think! Yup! We the People don’t have a pray, they have become so complacent that they will swallow and thing now that the US Government dishes out on a platter of last rights just before their last dinner! BofAAH’s makes Black Diamond’s ski slope look like mount… Everest in height comparison to the volume of long term debt!

10:52 am July 1, 2008

JS wrote :

Financials vs. Techs

David, financial shares are surely a mixed bag. The opportunities are in the small and promising companies in the tech sector. For example, AFOP, a supplier of components for fiber optic systems, raised its revenue and EPS guidance for the second quarter of 2008. I am long AFOP. The Company's higher than anticipated net sales and quarterly profits primarily reflects stronger than expected bookings from key customers and continuous business progress achieved in the first half of 2008.

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